The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3690 level and was supported around the $1.3565 level. The common currency extended gains from late last week after it was reported that eurozone officials reached an agreement to provide financial assistance to Greece if that country cannot meet its refinancing needs in the market. Greece has billions of euro in bonds maturing over the next couple of months and the recent increase in Greek yields may render it too expensive - or even impossible - for Greece to refinance its maturing debt. The package offered by Greek officials is said to total some US$ 61 billion. The spread between Greek ten-year bonds and German bunds narrowed today to around 350bps. Dealers will again focus on the significant fiscal problems of Spain and Portugal and eurozone officials may be forced to assist them as well. European Central Bank President Trichet reported the Greek plan as a positive step and called on the Greek government to meet its fiscal obligations. German Chancellor Merkel is said to be facing major criticisms in her country for agreeing to the new financial assistance to Greece at below-market rates. Data to be released in Germany tomorrow include March consumer price inflation followed by French February current account data and March consumer price inflation data on Wednesday. In U.S. news, the March monthly budget statement printed at -US$ 65.4 billion. Data to be released in the U.S. tomorrow include the March NFIB small business optimism index, February trade balance, and March import price index. Fed Governors Duke and Tarullo spoke today about non-monetary issues. Euro bids are cited around the US$ 1.3175 level.
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